Wednesday, December 01, 2010

What Caused The Depression?

There has been much speculation on this subject. The simple reality is the Federal Reserve Board was over printing money causing price bubbles that popped as with the 1929 stock market crash as well as the sub prime bust a couple years ago.

What caused the Great Depression to last so long is the same poison we have today. The government and central bank are desperately trying to manage prices instead of allowing the dollar to be revalued to the realities of American society. Basically, the more the Fed bankers and federal government try to keep home prices from falling to where people can afford to buy them again nothing will improve in the economy.

The fact is things will get worse. By creating new money out of thin air it will cause price increases alright but not for Real Estate. Fuel, food, health care, auto parts, etc. will surge in price diminishing Americans ability to purchase a home even more.

Nope! We're in a classic depression - an economic spiral downward but we're still at the rim. When we drop a bit more the speed of the decline will accelerate.

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